As first quarter earnings season continues to bring moderately good news for the nation's largest public companies, another good sign came from the land of private companies. On Monday, Sageworks reported that sales at U.S. private companies have grown at an annual rate of 8 percent, and net profit margins have risen to 7.8 percent.
While sales growth has slowed somewhat from 9.4 percent in the year ending April 2013, net profit margins have risen substantially, growing from 4.7 percent in the year ending April 2012 to 6.1 percent in 2013 and now 7.8 percent.
"The fact that companies are making so much money is a solid sign for further economic growth," said Sageworks analyst Libby Bierman.
From its work with finance professionals, Sageworks has developed a proprietary database of financial information, and it is from this data that it draws insights about the health of private sector companies overall.
Of course, Sageworks' findings are consistent with the strength we've seen in the earning of the nation's largest companies. Looking at the first 247 of the S&P 500 companies reporting first-quarter earnings, actual earnings were up 5.5 percent compared to the period last year, according to Thomson Reuters. And on the top line, reported revenues are up 4.3 percent.
"There is no doubt that companies for doing better," said Anthony Grisanti of GRZ Energy. "Whether this will translate to additional hiring remains to be seen. But certainly, all the conditions for an improving employment picture are there."